Thursday, October 1, 2015

National System of Innovation

Muhammad Shafique

Cornell University, INSEAD, and World Intellectual Property Organization (WIPO) have recently released the report on Global Innovation Index (GII) 2015. While emphasizing the key role of innovation in driving economic growth and development, this year's GII report highlights the role of policy and institutional conditions in promoting innovation. The report also provides many lessons drawn from the nations found as innovation achievers and outperformers.

Among the 141 economies included in the index, Pakistan ranks 131, staying on the heels of Nicaragua, Bangladesh, Nigeria, Ethiopia, and Algeria. This state of performance is obviously nowhere near Pakistan's potential given her size, resources, and geographic location. Thus the report provides an opportunity and the knowledge base to review our innovation performance as a nation and reflect on possible avenues for improvement.

The state-of-the-art knowledge about innovation in general and the GII report in particular suggest that economic growth and development of a nation are determined by the national system of innovation on the one hand and its culture on the other. The former relates to the institutional conditions and the latter relates to the values, attitudes, and norms of the society. Fortunately, both are interrelated and hence both can be influenced and reshaped through public policy.

The report suggests that an explicit and coherent national innovation policy mix plays a key role in the innovation performance of a nation. Several countries have realized this need and explicitly included innovation policy as part of the portfolio of a ministry. Perhaps one of the reasons behind our dismal performance is the neglect of innovation in national development plans. We can certainly benefit by explicitly incorporating innovation in our national plans and policies in the light of our peculiar needs, problems, and the resource base. Accordingly, innovation policy may be included in the portfolio of one of existing ministries, such as the ministry of planning, development, and reform.

This needs to be remembered, however, that creation of a productive national system of innovation as well as the culture of innovation requires incorporation of innovation in all policies and plans related to national development. Therefore, regardless of which institution steers the innovation policy plan, coordination and integration with all related institutions and policies is the key to success.

The GII report has highlighted several pillars of innovation inputs and outputs. Human capital and research is one of these pillars of innovation. Accordingly, education and research & development (R&D) are important parts of this pillar.

Education is an important input factor because it transforms human population into human capital that can contribute to the productive activities of the nation. Therefore, a significant part of the poor performance of Pakistan can be traced to its education system. Unfortunately, the education system in Pakistan is highly fragmented and socially stratified at the foundational (primary and secondary) as well as tertiary levels and does a poor job in fulfilling its universal purpose.

The public education system has been continuously deteriorating due to several reasons. First, the rate of growth in number of public schools and colleges has lagged far behind the rate of growth in population. This situation has been compounded due to the creation of ghost schools and ghost teachers who exist only in government records. Consequently, a large number of children in rural areas do not have access to education. Second, lack of growth in the number of public schools and deterioration in the quality of education in existing schools has created room for private interests to intervene. The result: mushrooming growth of private schools of numerous kinds in semi-urban and urban areas. Due to the lack of proper regulation of school system, this phenomenon is negatively affecting the society on several accounts, including poor stock and flow of human capital for the national system of innovation.

On the other hand, without due attention to and investment in foundational education, we have started to expect miracles from higher education sector. Without proper planning about the kind of knowledge and human capital the nation needs, several sprints were made on several fronts of higher education. First, we prompted mushroom growth of new universities without due consideration to the supply of qualified faculty. Consequently, universities have employed underqualified and untrained people for teaching and research. Second, new universities started numerous programs, including research degree programs, without properly assessing the demand for those programs and employability of graduates. In short, despite the lack of qualified faculty, universities have continued to produce inadequately trained research graduates and employing them as faculty and research staff. Therefore, the higher education system has created a circular flow of underdeveloped human capital for itself.

As a result of this self-feeding phenomenon, the nation has 'progressed' in terms of number of degree awarding institutions and number of graduates holding advance degrees but the quality of human capital stock and flow has not improved significantly. Nor does the knowledge produced from research programs of universities help understand and solve the contemporary problems facing the nation. This 'progress' in higher education has helped nothing but raise the bar of academic qualifications for employment and fueled the quest for university degrees, hence fake degree scandals and scams. In short, it may be expected that the net effect of the developments in relation to education during recent decades is negative.

Research and development (R&D) is a vital source of innovation and Pakistan has a dismal record on this account as well with an exception to defense-related R&D. Public R&D has been largely unproductive and private R&D is scarce. This is partly due to the fact that Pakistan still lacks a culture of innovation because relevant institutions are not performing their due role. Here again, universities are important suppliers of key inputs to the R&D system of a nation, including knowledge and human capital. However, despite the fact that the nation has several engineering and technology universities, their practical contributions to R&D output of the nation are negligible.

In the short run, Pakistan can improve its innovation performance in the areas of human capital and research through at least two measures. First, universities need to take stock of their existing knowledge base and deploy it to diagnose and help solve the real problems of Pakistan in various areas. To this end, universities should engage with local industry and institutions to help identify and solve their needs and problems, particularly through their existing research programs. Second, universities should create a culture of innovation and gear their existing training programs to generate knowledge and skills that can help foster entrepreneurship among youth. Third, government should expand the scope of short-term training programs in entrepreneurship among unemployed youth.

In the long run, Pakistan needs serious reforms in several areas to develop an effective national system of innovation, particularly in the subsystem that produces knowledge and prepares human capital. Unless this subsystem contributes the kind of localized knowledge and human capital that can help diagnose and solve the practical problems facing Pakistan, any vision and hope of national development is unlikely to materialize.

The writer is a doctoral fellow in economics and management of innovation and technological change at Maastricht University, The Netherlands, and a faculty member at Faculty of Management Sciences, International Islamic University Islamabad, Pakistan.